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China’s capitalist counter-revolution
As part of our series, The China Debate, begun in
Socialism Today No.108 (April 2007), we publish below an article by
VINCENT KOLO which offers a view on the nature of China’s state.
MARXISTS LIKE EVERYONE else are discussing China,
which has become central to economic and political developments in the
world. An important aspect of this discussion is how we view the Chinese
state. The state (the police, army, judiciary and, in China’s case, the
ruling Chinese ‘Communist’ Party – CCP) is as Lenin explained "an organ
for the oppression of one class by another". In China, which class is
oppressor and which are oppressed?
This discussion can be enormously beneficial in
deepening our understanding of processes in China and perspectives for
the period ahead. Our starting point is the brutal social
counter-revolution of the last two decades that has seen the former
Maoist-Stalinist bureaucracy, like its counterparts in the Soviet Union
and Eastern Europe, abandon central planning and shift to a capitalist
position. If we ask which class has benefited from the process in China,
then without doubt the answer is the bourgeoisie, in China and globally.
In 1949, the Chinese revolution meant a shift in the class balance of
forces internationally. Today, the counter-revolution has shifted the
balance in the other direction. There is absolutely nothing progressive
in the current Chinese state.
China today is synonymous with vast sweatshops and
the most brutal exploitation of labour by domestic and global
capitalism. The majority of the ‘new’ industrial working class, mostly
rural migrants who are the legal equivalent of ‘paperless’ immigrants in
Europe or America, work twelve hours a day or longer, for pitiful wages,
in unsafe factories, under a military-style regime of fines and petty
rules. This edifice of super-exploitation is built around the repressive
one-party state of the CCP, which viciously crushes strikes and all
attempts to build free trade unions.
Mine and factory owners involved in serial
law-breaking and appalling workplace ‘accidents’ (136,000 fatalities in
2004) are protected by CCP officials and the police. After the deaths of
123 miners at one coalmine in Guangdong province last year, it was
discovered that half the shareholders were local government officials.
One police officer had shares worth about 30 million yuan (€2.8 million)
in the mine.
This is gangster capitalism, as brutal and lawless
as that in Russia and other parts of the former Soviet Union. The top
echelons of the Chinese state, including the central government in
Beijing, are now fully integrated into the global capitalist system –
through the open door policy that president Hu Jintao describes as the
‘cornerstone’ of China’s economic development. As a result, China has
been turned upside down, from one of the most equal societies to one of
the most unequal – with a wealth gap greater than in the US, India and
Russia. This ‘fully capitalist’ programme is central to any discussion
on the class character of the CCP regime and state.
‘Radical neo-liberalism’
"CHINA HAS IMPLEMENTED one of the most radical
neo-liberal policies in the world", explains Chinese author Dale Wen,
whose report, China Copes with Globalisation, provides one of the best
summaries of the so-called ‘reform process’. Wen likens the policies of
the last 20 years to IMF and World Bank programmes in the neo-colonial
world, pointing out, "The major difference is that the Chinese
government willingly takes the measures".
Under the pressure of the masses aroused by the
revolution of 1949, the Maoist state delivered immense social
improvements in the field of educational standards, healthcare, housing
and poverty reduction. These policies were possible because the economic
foundations of this state rested on nationalised property and
centralised planning, albeit within narrow national-bureaucratic limits.
Most of these social gains have been liquidated as a result of the
capitalist counter-revolution. What remains for the Chinese masses are
only the worst leftovers of Stalinism (police terror and absence
of the most elementary democratic rights) combined with the worst
features of capitalism (extreme exploitation and absence of a social
safety net).
The following facts illustrate the devastating
effects of CCP policy:
• Education: Private sources account for 44% of
total education costs in China, the highest share in the world apart
from Chile. There is no longer any free education. Normal fees at
secondary school level in most cities are around €200 a year – two
month’s salary for a typical worker. In Shanghai, the average family
spends 25% of their income on their children’s education, compared to
10% in the United States. There are half a million unqualified teachers
and thousands of substandard unlicensed schools that cater for the 20
million migrant children who are debarred from attending state schools.
Illiteracy is on the rise as dropout rates soar, especially in rural
areas and among girls.
• Public health: China’s health service was once the
envy of Asia. Today, a bigger share of total medical expenditure is
financed privately in China than in the US. In the countryside,
one-third of rural clinics and local hospitals are on the brink of
bankruptcy and another third have already collapsed. Four hundred
million Chinese, a figure almost equivalent to the population of the
European Union, can no longer afford to visit a doctor.
• A similar process has taken place in the housing
sector and local transport.
China’s global role
WITH THE WORLD economy more interlinked than ever,
the question of the class character of the Chinese state and regime
cannot be approached solely from a national perspective. China is more
integrated into the capitalist world order than Russia and other
ex-Stalinist states. Foreign capitalists today control a quarter of
China’s industrial production (OECD 2005). The CCP’s economic model has
been based on "an unusually high degree of openness to the world economy
– foreign trade is 75% of its GDP", explains Susan L Shirk in her book
Fragile Superpower. This ratio is twice as high as India’s, and more
than three times that of Japan, Russia and the US.
The CCP regime today is instrumental in spreading
neo-liberalism globally. This process is in no way ambiguous – it is
strikingly clear. Chinese companies, many of which are state-owned, are
hated across whole swathes of Africa due to their union-busting,
corrupt, law-breaking and environmentally destructive practises. China’s
banks have shown themselves to be as parasitic as any in the capitalist
world – pouring billions of dollars into US subprime ‘derivatives’ for
example. In Iraq and other debtor countries, Chinese representatives
endorse treaties with exactly the same conditionality – privatisations,
deregulation and other neo-liberal policies – as demanded by other
capitalist powers. Foreign policy is of course an extension of domestic
policy, they are not separated by a Chinese wall.
Counter-revolution on the land
AN ESTIMATED 70 million peasants have been turned
off the land over the last two decades to make way for factories, roads,
and luxury projects like hotels and golf courses. Most land acquisitions
are illegal, thwarting central government attempts to control this
process.
There are more than a dozen property tycoons on the
most recent Forbes’ list of China’s 40 top billionaires. The list is
headed by 26 year-old Yang Huiyan, head of a Guangdong property empire,
whose personal fortune in 2007 was valued at $16.2 billion – a fortune
she inherited from her father. By comparison, in the years 2000-02, a
staggering 42% of the rural population suffered an absolute decline in
income.
In the 1950s, Mao’s regime nationalised the land and
this measure has not formally been reversed, although successive partial
‘reforms’ have privatised land usage even while land ownership remains
in the hands of the state. But as Lenin explained, land nationalisation
does not in itself constitute a barrier to capitalism: "Is such a reform
possible within the framework of capitalism? It is not only possible but
it represents the purest, most consistent, and ideally perfect
capitalism... According to Marx’s theory, land nationalisation means a
maximum elimination of medieval monopolies and medieval relations in
agriculture, maximum freedom in buying and selling land, and maximum
facilities for agriculture to adapt itself to the market". (Democracy
and Narodism in China, 15 July 1912)
Shrinking state
AS A RESULT of neo-liberal ‘reforms’ and anarchic
capitalist growth the state’s economic power has been seriously
degraded. The list of economic spheres over which the Beijing regime has
lost control is long: urban property and construction sectors, credit
and most investment decisions, food and drug safety, environmental
protection, labour markets, most of manufacturing industry and, as we
see from the above, allocation of agricultural land.
Every year, the Heritage Foundation, a capitalist
think-tank, produces an Index of Economic Freedom, in which China
regularly outperforms Russia and other ex-Stalinist states. Under the
category ‘Freedom from government’, for example, based on an overview of
government spending and privatisation, China was deemed 88.6% ‘free’,
while Russia scored 71.6% and Ukraine only 61.9%. In China, total
government spending in 2006 equalled 20.8% of gross domestic product
(GDP), far lower than in Russia (33.6%), Ukraine (39.4%), and barely a
third of the level in Sweden (56.7%).
In both Russia and Ukraine, state-owned enterprises
and government ownership of property contribute a significantly higher
share of total government revenue, 6.1% and 5.6% respectively, than in
China where the figure is just 3.1% (all figures for 2006). In the
context of East Asia, with its ‘state capitalist’ tradition, China’s
figure is conspicuously low. The Malaysian and Taiwanese governments
receive 11.5% and 14.4% respectively of their income from the
state-owned sector.
The size of the state sector in itself is not
decisive in determining the class nature of society – which class
exercises economic power? In his analysis of Stalinism, The Revolution
Betrayed, Leon Trotsky predicted that a bourgeois counter-revolution in
the Soviet Union would be forced to retain a large state sector. In
China this is even more the case given the Confucian tradition of
government economic intervention, an important influence throughout East
Asia. There are countries today with a far higher degree of state
ownership than China – Iran for example, where the state controls 80% of
the economy.
Privatisation and downsizing
ACCORDING TO A National Bureau of Statistics report
in September 2007, foreign and private companies now account for 53% of
total industrial output in China, an increase from 41% in 2002. The
state-owned enterprises (SOEs) still play an important role, and
predominate among the very largest companies. But the only industrial
sectors in which SOEs now occupy a dominant position are in mining,
energy and utilities. According to an OECD report in December 2005, in
the remaining 23 major industrial sectors, from textiles and
telecommunications equipment to steel and automobiles, the private
sector employs two-thirds of the labour force and produces two-thirds of
these industries’ value added.
Today, "three-quarters of urban employees work
outside the state sector". (Shirk, Fragile Superpower) This is the
result of the frenetic pace of privatisation and downsizing in the state
sector over the last decade, accelerated by WTO strictures. As Zhou
Tianyong, professor with the Party School of the Central Committee of
the CCP explains, "the number of employees at state-owned enterprises
and collective ownerships has dropped from 130 million in the mid-1990s
to 30 million today". (China Daily, 8 October 2007)
Measured by the number of employees affected, this
is without question the biggest privatisation programme in any country
at any time. Given that agriculture was already privatised in the 1980s,
the vast majority of Chinese – over 90% – are now employed in the
private sector.
The state sector today is a lever for developing the
capitalist economy, providing a framework of essential industries such
as energy and communications, plus targeted investments in certain
advanced technological sectors after the Japanese and Korean models. It
would be incorrect to talk about ‘capitalist’ and ‘non-capitalist’
sectors of the economy, as if the state sector operated on an
alternative, non-capitalist basis.
China’s SOEs have been transformed by wave after
wave of corporate ‘reforms’, mergers and downsizing, management buy-outs
(MBOs) and share-ownership, recruitment of western educated managers,
public listings, joint ventures with foreign capital, and differing
degrees of privatisation. Even when a company is wholly state-owned (a
rarity today) it operates to make a profit in the same way as a private
company. Commenting on the Thatcher government’s attacks on nationalised
industries in Britain, a Financial Times columnist argued, "the
transformation of British Airways and British Steel in the 1980s was not
the result of privatisation – transformation preceded privatisation and
made it possible". (John Kay, 26 September 2007)
This is exactly what has happened in China – only
the scale is different. The state industrial and commercial sector
consists of completely autonomous and in most cases semi-privatised
units. This represents a form of ‘state capitalism’ similar to Gazprom,
the state energy conglomerate that alone produces 8% of Russia’s GDP.
State-led investments
IT IS TRUE that the bulk of investment in China
comes from the state sector. But this is the case in Russia too. In
China, however, most investment decisions are made at local level, very
often in direct contravention of central government policies. A large
proportion of infrastructure spending by local governments goes on
prestige projects geared to attract private ‘investors’ – luxury hotels,
conference centres, new ‘international’ airports, golf courses and
half-deserted shopping malls.
This represents an insane – unrestrained capitalist
– waste of public funds, and is setting the stage for an economic crash
similar to the one that struck Southeast Asia ten years ago. No
socialist government, or even reformist government of the old pattern,
would approach the issue of public investment in this criminal fashion.
But today every Chinese municipality and region wants its own direct
link to the world market, at a time when the country’s foreign trade
dependence is close to ‘overkill’. The most pressing need is to develop
China’s internal market, but this can only be done by raising living
standards and reconstructing essential public services like health,
education and affordable housing – areas which local CCP bosses refuse
to invest in.
The banking sector is majority state-owned in China.
But this too is not unique, especially in Asia. China’s ‘Big Four’
majority-state-owned banks account for 71% of all loans and 62% of
deposits. By comparison, in Russia the largest state-owned bank Sberbank
holds over 60% of household deposits and 40% of all loans. In India, the
state-owned banks account for 75% of all commercial banking. (Bank of
International Settlements)
It would be a mistake to dismiss the neo-liberal
‘reforms’ (partial privatisations, mergers with foreign companies) in
banking and other sectors as superficial – the changes are all too real
and extremely detrimental to the interests of ordinary working people in
China and abroad. A growing share of China’s gargantuan pool of savings
– around $1.8 trillion – is being ploughed into speculative deals around
the world, enriching hedge funds and other financial parasites instead
of being used to rebuild collapsed public services.
Reform or revolution?
THE CHINESE STATE – like the governments of Germany
and Britain recently – can and will intervene to rescue failing banks or
strategic companies, and this can include renationalisation.
Renationalisation on a capitalist basis, however, does not represent a
return to central planning. Only a mass revolutionary movement of the
super-oppressed workers and peasants can shatter what are now powerful
capitalist economic foundations in China, which are closely bound up
with global capitalism. Such a movement will not want to go back to
Maoism-Stalinism, but will strive towards genuine democratic socialist
planning based on the colossal potential of the Chinese proletariat, now
numbering over 250 million.
The process of counter-revolution in China has been
complex and sometimes extremely contradictory, but nevertheless the
victory of bourgeois counter-revolution, albeit in a peculiar
‘Confucian’ form, is today brutally clear. A political –
‘anti-bureaucratic’ – revolution is no longer enough to raise the
working class to power. Nor is it correct to say a new revolution will
combine the tasks of the political and social revolution – this is true
of every social revolution, which involves a change of the
economic base and of necessity also the political superstructure, the
state. A qualitative change has occurred, whereby a reversal of China’s
capitalist counter-revolution is no longer possible other than through a
new proletarian social revolution that must overthrow the present
state and expropriate its main beneficiaries, the Chinese and foreign
capitalists. This point is extremely important when we come to questions
of perspectives and programme for China.
What is the bureaucracy?
MARXISTS DO NOT base our assessment of the Chinese
regime on its still ‘communist’ (Stalinist) symbols and occasional
phraseology. This external shell is an entirely secondary factor: just
as there are social democratic and ‘communist’ parties elsewhere that
continue to march on May Day and sing the ‘Internationale’, while
pursuing wholly capitalist policies. The class character of any social
organism, regime, or party, is determined by the class interests it
serves – its social base.
The Maoist regime acted to block any independent
movements of the working class using a mix of cunning, manoeuvres and
repression. But at the same time, in order to maintain its own
privileges and power, it defended state property and the social gains of
the revolution. This gave the regime a contradictory character – a
combination of reactionary and progressive features. This is no longer
the case. Having thrown in its lot with capitalism, the Chinese state
has lost this dual, contradictory, character.
Trotsky described the Stalinist bureaucracy as a
cancerous tumour on the body of the workers’ state. He explained that,
"A tumour can grow to tremendous size and even strangle the living
organism, but a tumour can never become an independent organism". (The
Class Nature of the Soviet State, 1933)
The ‘tumour’ of the Chinese bureaucracy cannot
acquire a life of its own in relation to the means of production, and it
is certainly not itself the repository of the socially
progressive features created by the 1949 revolution. Rather the opposite
is true. Under Stalinism and Maoism these gains existed in the
consciousness and mass pressure of the workers and poor peasants,
despite the disorganising and confusing role of the bureaucracy. As
Trotsky also explained, "The existence of a bureaucracy, in all its
variety of forms and differences in specific weight, characterises every
class regime. Its power is of a reflected character. The
bureaucracy is indissolubly bound up with a ruling economic class,
feeding itself upon the social roots of the latter, maintaining itself
and falling together with it". (ibid, emphasis by VK)
Which is the ruling economic class in China today?
With the destruction of the planned economy it is no longer the working
class. A section of the former Maoist bureaucracy has converted itself
through the ‘reform process’ into a property owning class.
The nexus of state and private capital is not a
rigid one, but fluid, reflecting a vast array of intermediate,
part-state part-private arrangements. The capitalist class is dependent
on the current state for contracts, loans, favours and, above all, for
protection from the working class. Of China’s 20,000 richest
businessmen, 90% are either CCP members or their relatives.
No ‘big bang’?
THE CCP REGIME and the bureaucracy as a whole were
never in themselves the barrier to capitalist counter-revolution – this
is the key to understanding what has happened. As in Russia and other
ex-Stalinist states the resistance of the working class was the only
real barrier to capitalist counter-revolution. This resistance – which
at times assumed mass proportions – was nevertheless overcome in China
due to a combination of factors. The terrifying and excessive violence
used to crush the nascent revolutionary movement of 1989 was a critical
factor. Rapid economic growth (averaging 10% per year over the past
decade) has also provided a certain ‘safety valve’ for the regime.
For Trotsky, the threat of capitalist restoration
did not hinge upon whether or not the Stalinist party was overthrown.
This was only one possible perspective: "But bourgeois restoration,
speaking in general, is only conceivable either in the form of a
decisive and sharp overturn (with or without intervention) or in the
form of several successive shifts...
"Thus, as long as the European revolution has not
conquered, the possibilities of bourgeois restoration in our country
cannot be denied. Which of the two possible paths is the more likely
under our circumstances: the path of an abrupt counter-revolutionary
overturn or the path of successive shiftings, with a bit of a
shake-up at every stage and a Thermidorian shift as the most
imminent stage? This question can be answered, I think, only in an
extremely conditional way". (The Challenge of the Left Opposition,
1926-27, emphasis by VK)
This "path of successive shiftings" is an excellent
description of what has happened in China. Capitalism, of a peculiar
Chinese type, has been restored. This began as an empirical reflex by
the Stalinist regime in the late 1970s, a search for a way out of the
political and economic crisis, with elements of civil war, that it
inherited from Mao. In the early stages this was an attempt to harness
some market mechanisms within a Stalinist state-owned economy. But such
processes have a logic of their own especially given the delay of the
world socialist revolution, the crisis and collapse of Stalinism
worldwide, and the ferocious acceleration of neo-liberal globalisation.
Unlike in the Soviet Union, there was no ‘big bang’
implosion of the one-party state and the CCP remains in power. But the
emerging capitalist class particularly in the Russian Federation saw the
break-up of the Soviet state as a prerequisite for completing the
counter-revolution. In China’s case, however, with its history of
warlordism and fragmentation, and with the immediate threat of mass
protests exorcised by the massacre of 1989, the standpoint of the
emerging capitalist class was different. Here, the continuation of CCP
rule – to maintain ‘order’ and hold the country together – was the most
advantageous basis for developing capitalism.
Who today is demanding regime change in China?
Certainly not the capitalists, who understand that by keeping China’s
massive working class down, the present regime is the best they could
realistically hope for. Even the ‘democratic’ bourgeoisie – and they are
a minority – do not seek the downfall of the CCP regime, rather its
‘reformation’. This gives the clearest possible answer to the question
as to which class interests the Chinese state serves today.
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